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                                          TEAM MEMBERS
                                         LAS VEGAS HILTON

General Manager
Fire Rock Navajo Casino
Church Rock, New Mexico

Casino Manager
Holland Casino - Leeuwarden
Leeuwarden, The Netherlands

Gaming Machine Product Development Mgr
Sky City Entertainment Group
Auckland, New Zealand

Executive Director of Finance
Grand Sierra Resort and Casino
Reno, Nevada

Director of Marketing
Feather Falls Casino
Oroville, California
                           PHASE 1


The Las Vegas Hilton (LVH) was built originally as the Las Vegas International by Kirk
Kerkorian, opening in 1969. At the time, it was touted to be the largest hotel in the world, and it
was clearly the largest casino-hotel that existed at that time. In 1971, it was sold to the Hilton
Corporation and was rebranded as the Las Vegas Hilton.

Located away from the Strip on Paradise Road, from the outset LVH had to develop much of its
own business which it continued to do over the years; it did so by taking advantage of its
proximity to the Las Vegas Convention Center, adjacent to the Las Vegas Hilton. The property
also had an aggressive entertainment policy, and was famous at the venue where Barbra Streisand
opened the showroom, Elvis performed for the last six years of his life, Wayne Newton had been
a regular, Andre Lloyd Webber produced Starlight Express, and Willie Nelson made regular
appearances. In the 1990s, LVH underwrote the development of the Star Trek Experience,
including a themed “SpaceQuest” casino within the casino, a Star Trek adventure ride, and a shop
that would sell memorabilia, was an attempt to bring in another market demographic. LVH
finally closed down the Star Trek Experience in 2008.

The Hilton ownership continued for a considerable period of time (under Hilton, Park Place
Entertainment, and Caesars Entertainment), but falling EBITDA in the late 1990s encouraged
corporate to put the property up for sale. After a failed effort to sell the Las Vegas Hilton to Ed
Roski, a Los Angeles developer, in the early part of the decade, the real estate investment firm
Colony Capital acquired the property in 2005 for $280 million. At the time, the price was
considered a bargain by some, because it included 59 acres along with the 3,000 room hotel
facility with all its existing but aging restaurant, retain, and convention facilities. Colony has
since spent about $100 million in upgrades, primarily in refurbishing the hotel rooms and public
areas within the facility.

In some respects LVH is viewed as a tourist and conventioneers’ warehouse, with over 3,000
hotel rooms, most in the three to four star quality. On top of the building are three “Super Suites”
that were built by Hilton in the early 1990s at a cost of $40 million to cater to the “whales,” the
high rollers primarily from Asia who have a penchant for high stakes baccarat. Though LVH is
no longer a serious competitor in the baccarat market (MGM, Wynn, and Venetian capture almost
all that business these days), the Super Suites are still very useful for serious high end players at
The challenge for the Las Vegas Hilton has been to keep itself attractive in light of the many new
mega-casinos that have been built in Las Vegas, especially along the Strip, since 1989. The
recession that began in late 2007 has eroded the operation’s profitability, and there has been a
serious deterioration in average daily room rate as well as occupancy rates. The convention trade
in Las Vegas has declined dramatically between 2007 and the present, and there are only a few
signs that it has begun to recover in 2010. Colony Capital is of course interested in maximizing
the profitability of its operations, but their view is that if the property can be positioned for sale in
the intermediate future at a reasonable price, that would be consistent with their overall corporate

As a Team, your PHASE 1 tasks are:

             1. Identify at least ten key metrics (related to performance of casino games,
                different departments, customer behavior, perceived customer service levels, cost
                containment, employee morale, etc.) that will allow you to monitor the
                performance of this operation over time. These should be linked to overall
                objectives for managing the property, and should be among the most important
                for you to make the best strategic decisions relative to your overall objectives
                into the future. (If you list more than 10, identify your top ten.)
             2. As the new Management Team, list (in bullet points) what you believe might
                have been the basic policies toward employment that prevailed at your property
                from early 2008 to the present. Use your imagination, prior knowledge of the
                casino and/or company, and collective experience regarding your own casino
                or other casinos with which you are familiar to identify some basics of a Human
                Resources Strategy that may have prevailed over this period. Again using bullet
                points, note how this strategy may have been modified since early 2008. Given
                this as a base, and in light of the current competitive and economic conditions in
                Las Vegas, as well as the company’s broad directives, put forward an HR
                strategy that will guide your management team over the next nine months or so.
                This could include consideration of benchmarks, benefits, incentive programs for
                employees and hosts, and performance evaluation standards. (Keep in mind that
                you do have some unions to work with, especially the Culinary.) Prepare an
                internal memorandum of one page or less that will be circulated among your
                employees that clarifies this strategy. Note separately in one or two sentences
                what you hope to achieve with this memo.
             3. Briefly identify what you believe has been the target market for this casino under
                the prior management team. Based on the description of events above, use your
                imagination and collective experience to briefly summarize a marketing
                strategy that may have been in place at the property between early 2008 and the
                present. (Use bullet points.) Note how this marketing strategy might have been
                affected by cost cutting and the broader challenges confronting the Las Vegas
                gaming industry. Then recommend a marketing strategy that will drive the
                property forward over the next nine months. In particular, identify your target
                market(s) and try to include clever and cost-effective ways of increasing market
                share and growing revenues without overly taxing operating budgets.
                Summarize this marketing strategy in one or two paragraphs.
             4. A freeze has been in place since August 2008 for any capital outlays beyond
                necessary replacement of non-functioning or damaged equipment. As a result,
                there is deferred maintenance that has built up on a variety of assets, including
                carpets, walls (in need of painting), furniture and fixtures, software systems, and
                gaming equipment. For the next nine months, corporate has indicated you will
                   have $15 million that can be allocated to capital outlay needs. Drawing from
                   your imagination and collective experience, discuss a strategy that you will use
                   in allocating this amount to various areas within the facility.
                5. Write a one paragraph position strategy1 that explains how you might want the
                   property to be perceived by the public. This statement should explain who your
                   target audience is, your thematic premise, your service promise, your pricing
                   standards, and a statement of your quality objectives.

Try to be as specific as you are able in addressing the above issues, and keep in mind the budget
constraints and performance challenges for the property at the present time and over the next nine

A written response to the above inquiries is due no later than 10 am Saturday, November 7.
The response should be no more than five (5) type-written pages (Times New Roman, 10 point,
single spaced.) It must be e-mailed to the following address: .
Once a team has submitted its PHASE 1 report, the team members will receive their PHASE 2
instructions. Note that PHASE 1 submissions will be competitively graded and the results will be
reflected in the Casino Resort’s future performance indicators. If the Team wants their PHASE 2
instructions before Saturday morning, they need to submit the PHASE 1 report no later than 9 pm
Friday, November 6.

  Generic example of a Position Strategy: Our casino will target, attract and host low premium and qualified high grind gamblers by
providing very professional, yet “small town” style, guest service from highly-trained and motivated team members in a Western-
themed, very exciting, extremely clean and secure casino/hotel environment that features very good quality food and entertainment
products at low to moderate prices. We will be committed to make the guest feel lucky for having chosen our casino!

As the place where the Elvis Presley broke all Vegas show attendance records when it
was still called the International Hotel, The Las Vegas Hilton is a time capsule of classic

While the feeling is traditional, the hotel has recently gone through renovations. From the
front desk to the guest rooms, all surfaces were remodeled. Crystal chandeliers hang from
the ceiling of the 74,000 square-foot casino, where there is glass-encased high limit table
room with high limit slots. Just off from the casino, there is a one of the largest sports
book on the Strip with 400 seats, 42 televisions and 30 big screens.

The dining choices at the Las Vegas Hilton range from the award-winning Benihana, a
Japanese steakhouse, to The Buffet, where guests can enjoy the wide selection of choices.
After dinner, guests can take advantage of the star-studded entertainment at Hilton, with
Barry Manilow at the Hilton Theater or a variety show with Las Vegas favorites, the
Scintas. The Hilton also makes it convenient to casino-hop as one of the stops on the Las
Vegas Monorail.

Las Vegas Hilton Pool

There is no better way to beat the Vegas heat than at the Las Vegas Hilton pool! Located
outside the 3rd Floor, the Hilton's pool is the perfect place to relax in a cabana, sip on
cocktails from the Cabana Bar, and enjoy an unprecedented Strip skyline view! Don't
forget to check out the daily Cool by the Pool Happy Hour for 2-for-1 drinks, food
specials and live entertainment.

Spa at Las Vegas Hilton

Relax, revive, and rejuvenate in the spa at the Las Vegas Hilton. Tucked away on the
third-floor recreation deck, this tranquil hideaway offers a delightful and rewarding Las
Vegas spa vacation destination. Choose from a bountiful assortment of treatments --
including traditional Swedish massages, soothing body skin treatments, and cleansing
facials. Tone up in our state-of-the-art fitness center -- under the watchful eyes of our
exercise professionals – and then reward yourself with an afternoon snooze in a poolside
cabana. Invigorating and inspiring, the Las Vegas Hilton invites you to discover a
tranquil Off-Strip hideaway among Las Vegas spa resorts.


The Las Vegas Hilton boasts one of the best Las Vegas tennis clubs, complete with a pro shop
and beginner and intermediate classes.
Sports Book                   Seats 300. 28 televisions.
Poker Room
Health club                   Part of Spa
Spa                           The Spa
Shopping Center
Wedding Chapel                La Bella Chapel
Convention Facilities         200,000 square feet of meeting space
Business Center
Hotel Room Internet           $13.99
Casino Wireless Internet      $13.99
Wheelchair Accessible Rooms
RV Park
Child Care
Pets Allowed
Self Parking Garage
Valet Parking                 Free.
Airport Shuttle
Remote Baggage Check-in
On Site Catering              Call for details.
Movie Theater
Bowling Alley
Non-Smoking Gaming
Players Club                  Resorts Destination Casino Club
Buffet                        Buffet

Nightclub & Bars

             Rhythmically combining international spirits, the latest music and tableside bottle
             service, Tempo is the place to be if you need a new pace on the Strip.


888 Noodle Bar
Casa Nicola at the Las Vegas Hilton
    Chaises Snack Bar
    Fortuna at the Las Vegas Hilton
    Garden of the Dragon at Las Vegas Hilton
    Perks Place
    Superbook Deli
    Teru Sushi
    The Ice Cream Shoppe
    TJ's Steakhouse

    Gaming Machines - 1,310 total

                Anchor's Wheel of Gold - $.25, 19 machines - $0.25 to $0.75 bets
                Anchor's Wheel of Gold - $5.00, 2 machines - $5.00 to $15.00 bets
                Betty Boop's Big Hit
                Cool Millions Dollar Slot
                Dollar Slots, 181 machines
                Five Dollar Slots, 28 machines
                Half Dollar Slots, 3 machines
                Hundred Dollar Slots, 6 machines
                IGT - Megabucks, 6 machines
                IGT - Wheel of Fortune Progressive Dollar Slots - $0.25/$1.00 minimum bet
                IGT Austin Powers Video Slots
                IGT Elvis - $0.25/$1.00 minimum bet
                IGT Jeopardy - $0.25 minimum bet
                IGT Nickels Deluxe - $0.05 minimum bet
                IGT Party Time - $0.25 minimum bet
                Multi-denomination Slots, 44 machines
                Nickel Slots, 193 machines
                Other Slots, 3 machines
                Penny Slots, 427 machines
                Quarter Slots, 408 machines
                Slots - $100 Per-Pull
                Slots - $25 Per-Pull
                Twenty Five Dollar Slots, 11 machines
                Video Blackjack
                Video Keno
                Video Poker

    Table and Poker Games - 66 total

                3 Card Poker, 5 tables
                Baccarat, 2 tables
                Blackjack, 34 tables
                Craps, 5 tables
                Let it Ride, 1 table
                Mini-Baccarat, 5 tables
                Other Games, 5 tables
                Pai Gow Poker, 3 tables
                Roulette, 5 tables
                Spanish 21, 2 tables
            Wheel-of-Fortune, 1 table

    Other Gaming

            Race Book
            Sports Book


    It's easy for us to overlook this dinosaur -- look, we even called it a dinosaur. Totally unfair. It's one of the
    last of the dying breed of old Vegas hotels, but unlike many of its peers, it's still offering fine
    accommodations and even a bit more than that. A good place for adults -- we mean that in a good way --
    looking for Vegas fun, all the better with yet another room renovation. The overall vibe is still old-school
    Vegas -- we mean that in a good way -- with an old-fashioned glitzy casino that is small enough to navigate
    without a GPS device. Consider it even if you aren't an old-timer, and don't be put off by the distance from
    the Strip; the monorail stops here, making access easier than ever. When you consider that on nights when
    you can't touch a room on the Strip for less than $175, the Hilton will put you in a nice room with plenty of
    marble and clean, well-maintained furnishings for a decent price, it seems silly to not make the Hilton a top
    choice more often. The clientele is a mix of savvy business travelers who know a good hotel deal when
    they see it. There are quite a few solidly good restaurants, too. Those very same facilities, however, mean
    that even a small convention can sometimes drive the prices up at odd times -- then again, since
    conventions are often booked for weekdays, an atypical drop in price can occur on weekends. Just call or
    look at the website. The recently renovated, generously sized rooms do look fresh and include very good
    pillow-top mattresses and excellent amenities. Baths are smallish but do have nifty oval tubs. Upgrading to
    club level gets some complementary food and beverages served in a grown-up lounge.

    The Hilton has a strong showing of restaurants, including TJ's Steakhouse, a Benihana, and a buffet. The
    Shimmer Cabaret, a first-rate casino lounge/nightclub, has live entertainment and ongoing shows nightly.
    It's a great place to hang out in the evening, when it features regular sets by local cover bands. One of
    Elvis's sequined jumpsuits is enshrined in a glass case in the front, near the entrance to the lobby/casino (he
    played 837 sold-out shows here and Colonel Tom Parker's memorial service was held here in the hotel).
    There's also a major showroom, featuring resident headliner Barry Manilow and other guest performers.

    The third-floor roof comprises a well-landscaped 8-acre recreation deck with a large swimming pool, a 24-
    seat whirlpool spa, six Har-Tru tennis courts lit for night play, and more. Also on this level is a luxurious
    17,000-square-foot state-of-the-art health club offering Nautilus equipment, Lifecycles, treadmills, rowing
    machines, three whirlpool spas, steam, sauna, massage, and tanning beds. There's a $20-per-day fee to use
    the facilities, but guests are totally pampered: All toiletries are provided; there are comfortable TV lounges;
    complimentary bottled waters and juices are served in the canteen; and treatments include facials and
    oxygen pep-ups. Discounts on health club fees are available for multiple-day use.

    Facilities: 8 restaurants; food courts; casino; showrooms; outdoor pool; 6 night-lit tennis courts; health
    club; spa; video-game arcade; car-rental desk; business center; shopping arcade; salon; 24-hr. room service;
    laundry service; dry cleaning; executive-level rooms
                                 FINANCIAL INFORMATION
(Unaudited, in thousands)
                                                             Twelve Months Ended
                                                                 December 31,
                                         2006                       2007             2008             2009
     Casino                             $       151,516                    158,492          141,564     127,876
     Rooms                                      123,871                    133,821          124,071     100,520
     Food                                        91,764                     92,897           91,764      79,301
entertainment)                                    31,289                    34,526           32,368      30,006
     Other                                        26,985                    29,480           24,384      21,056
revenues                                        425,425                    449,216          414,151     358,759
allowances                                        28,030                    30,906           29,728      25,319
           Net revenues                 $       397,395                    418,310          384,423     333,440
Direct costs and
expenses of operating
     Casino                                       91,667                    95,254           84,797      76,086
     Rooms                                        39,639                    42,154           38,462      32,367
     Food                                         79,835                    81,285           80,293      68,596
entertainment)                                    17,929                    19,956           18,256      16,743
     Other                                        16,353                    17,275           14,484      12,065
     General and
administrative ǂ                                  83,383                    86,699           75,375      63,859

         Total costs
and expenses                            $       328,805                    342,622          311,667     269,717
FROM OPERATIONS                         $         68,589                    75,688           72,755      63,723

EBITDA                                            97,518                   104,438          105,059      91,706
    Depreciation and
amortization                                      28,929                    28,750           32,304      27,983
   Interest expense*                              38,561                    37,946           37,509      36,043
INCOME                                  $          1,099                     8,992            2,942          -303

ǂ Excluding interest, but including Depreciation and Amortization
        January-09      11,452    -18.12%
       February-09      10,083    -14.48%
          March-09      11,470    -11.23%
           April-09     10,601    -14.01%
            May-09      10,439     -9.88%
           June-09       9,878    -12.16%
            July-09     10,787     -9.72%
         August-09       9,037    -16.64%
      September-09      11,210     -6.03%
        October-09      11,277     -2.96%
      November-09       10,588     -0.92%
      December-09       11,054      3.44%
        January-10      11,019     -3.79%
       February-10       9,881     -2.00%
          March-10      10,624     -7.37%
           April-10      9,917     -6.45%
            May-10       9,675     -7.31%
           June-10       9,437     -4.47%
            July-10     10,336     -4.18%
         August-10       8,603     -4.80%

          (through June 30)
        HOTEL      Daily
        ROOM       Room     Occupanc      Room           Food        Beverage
           S       Rate        y         Revenues      Revenues      Revenues
                   $128.7               $123,871,07    $91,763,84    $31,289,26
  2006    2,956          0    89.21%              5             7             0
                   $138.6               $133,821,32    $92,896,73    $34,526,08
  2007    2,956          0    89.49%              5             4             0
                   $131.4               $124,070,97    $91,763,84    $32,368,20
  2008    2,956          0    87.51%              5             7             0
                   $112.5               $100,520,10    $79,301,36    $30,005,92
  2009    2,936          0    83.38%              0             0             0
                   $109.5                              $82,473,41    $31,806,27
  2010    2,936          5    84.56%    $99,271,886             4             5

      Casino    Room     Food          Beverage       G&A         Other         TOTAL
 2006       664     519     773               165           292           428     2,841
 2007       656     503     718               191           318           397     2,782
 2008       677     534     772               207           294           411     2,895
 2009       645     506     740               199           279           378     2,748
 2010       680     534     780               210           295           399     2,897
   LAS VEGAS STRIP $72 million and above
STATISTICS (as of June)
           Casino dept      Rooms Dept.    Food Dept.   Bev. Dept.    Depts.        G&A            TOTAL
    2006         23,357          18,267        27,199         5,788       10,274          15,065       99,950
    2007         22,477          17,207        24,599         6,526       10,872          13,591       95,272
    2008         23,178          18,284        26,435         7,078       10,048          14,057       99,080
    2009         21,602          16,968        24,796         6,667         9,365         12,679       92,077
    2010         23,601          18,538        27,091         7,285       10,232          13,853      100,600

           Casino Dept.     Rooms Dept.    Food Dept.   Bev. Dept.    Depts.
    2006          40.5%           67.0%        12.0%         41.7%          39.4%
    2007          40.8%           69.2%        10.3%         42.7%          35.6%
    2008          38.3%           67.6%        17.1%         41.1%          42.8%
    2009          41.0%           66.5%        18.3%         41.5%          42.1%
    2010          39.5%           67.5%        17.3%         42.1%          39.8%

GROSS GAMING              Las
  REVENUES               Vegas      Baccarat
      ($000s)             Strip       LVS
                       ($ 72 m+)    ($72 m+)
         January-06       583,667     91,009
        February-06       509,885     79,454
           March-06       494,425     35,959
            April-06      473,866     55,358
             May-06       555,052     86,882
            June-06       414,148     41,413
             July-06      490,023     52,484
          August-06       511,002     75,609
       September-06       470,928     55,074
         October-06       486,147     29,236
       November-06        599,961    117,242
       December-06        574,658    114,081
         January-07       562,325     90,757
        February-07       535,671    117,039
           March-07       497,300     36,039
            April-07      486,973     60,354
             May-07       560,421     71,237
            June-07       460,517     44,361
                  Vegas     Baccarat
                   Strip      LVS
                ($ 72 m+)   ($72 m+)
      July-07     565,189     72,209
   August-07      492,126     70,349
September-07      509,096     45,640
  October-07      594,608    108,107
November-07       485,326     46,961
December-07       580,892    140,354
  January-08      559,728     80,983
 February-08      519,870    116,335
    March-08      477,018     34,766
     April-08     481,158     59,184
      May-08      465,935     69,445
     June-08      430,187     45,224
      July-08     461,287     52,311
   August-08      442,886     71,837
September-08      484,923     76,618
  October-08      438,300     40,500
November-08       405,552     39,780
December-08       443,922     78,129
  January-09      479,937     96,169
 February-09      395,360     57,490
    March-09      417,854     33,496
     April-09     407,932     52,681
      May-09      446,033     96,224
     June-09      378,734     47,704
      July-09     429,707     68,228
   August-09      412,333    109,515
September-09      446,129     70,489
  October-09      420,435     42,525
November-09       395,772     40,973
December-09       507,349     97,661
  January-10      555,811    129,828

 February-10     463,288      74,737

    March-10     452,798      41,535

     April-10    447,807      60,583
      May-10     493,263     115,469
     June-10     422,303      54,860
      July-10    479,225      74,369
   August-10     438,300      93,088

Off-Strip location made Hilton one of LV’s biggest gambles
Sun Staff

Wednesday, July 12, 2000

The Las Vegas Hilton was the biggest hotel in the world when it opened as the International Hotel in 1969 -
- and it was considered the biggest gamble taken by a casino operator.

Billionaire Kirk Kerkorian's three-winged tower opened with 1,512 rooms, and the old-time gamers
wondered aloud who would fill those rooms.

Not only were there too many of them, but the property was off the Strip -- away from the action, they

By the time Barron Hilton and his Hilton Corp. purchased the massive property in 1973, the critics had
been proven partly right by the International's uneven performance in its first four years. But within a
couple of years of the sale, the Las Vegas Hilton was filling its rooms and quieting the critics.

The hotel quickly established itself as a resort capable of drawing big-name entertainers.

Singer Barbra Streisand opened the hotel, making $1 million for her twice nightly performances for the
month -- then considered a fortune for a Las Vegas entertainer. Actor Cary Grant and basketball star Wilt
Chamberlain, with 2,000 other VIPs, saw the show.

Elvis Presley followed Streisand a month later, eventually establishing the International and later the Hilton
as the King's Las Vegas home.

The Hilton's headliners also included Wayne Newton, who played the Hilton from 1987 until 1993, Lou
Rawls, Bill Cosby, Nancy Wilson, Liberace, the Monkeys and the road show of "Hair." Recently it has
developed a reputation for country music headliners.

But in local memory, the Hilton is known as much for fire and scandal as spotlights.

On Feb. 10, 1981, a fire at the Hilton killed eight people and hurt more than 200. The blaze came only
months after the worst fire in Las Vegas history, at the MGM Grand hotel-casino, which killed 87 people
and injured more than 700.

At the Hilton, where damages reached $13 million, a busboy had torched an eighth-floor lobby curtain with
a marijuana cigarette. Philip Bruce Cline was convicted of arson and received eight life sentences plus 15
years as punishment.

In the wake of those two fires, resorts were required to retrofit fire-safety measures such as sprinklers in
From the ashes rose a bigger and better Hilton. Boasting the tallest sign in the world at 362 feet, the
Hilton's peak attraction came crashing down in a July 1994 summer storm. The new sign rises 262 feet and
cost $6 million to replace.

A national scandal brought more unwanted attention to the Hilton. In 1991 Navy Lt. Paula Coughlin
charged that naval aviators attending the Tailhook Association convention at the Hilton that year sexually
assaulted her in a hallway as part of an organized system of drinking and abusing women.

Her descriptions of the drunken escapades at the hotel during the convention eventually brought forward
other tales from as many as 80 women that they had been groped by drunken military pilots.

Coughlin eventually left the Navy and sued, winning $400,000 from the Tailhook Association and $6.8
million from the Hilton. The hotel appealed, and the award was reduced to $5.2 million.

Six women settled with the San Diego-based Tailhook Association in 1995.

The scandal gave the Navy a black eye, triggered the resignation of Navy Secretary H. Lawrence Garrett
and changed the way aviators were promoted, requiring extra scrutiny of anyone who had attended the

In the mid-1990s the Hilton began a move to its current look, adding attractions from a laser light show to
Star Trek as other hotels along the famed Strip became themed resorts.

In 1996 the Hilton paired with Paramount Parks to build "Star Trek: The Experience" ushered in by laser
shows, flaming signs and fireworks. The $50 million simulator ride opened in February 1997.

In addition to finding a theme, the Hilton also attracted its share of sports greats. Mike Tyson beat Frank
Bruno there in 1989. Michael Carbajal knocked out junior flyweight champ Humberto Gonzalez there in
1993. And golf champion Tiger Woods played at the Las Vegas Hilton Country Club in 1996.

Las Vegas Hilton sticking with convention marketing strategy
By Liz Benston


Tuesday, March 4, 2003

Park Place Entertainment Corp. expects to focus on driving convention business to its Las Vegas Hilton
property, officials said today following an announcement that the company had settled long-standing
litigation initiated after a failed deal to sell the property more than two years ago.

Park Place said Monday it had settled lawsuits involving Los Angeles developer Ed Roski Jr. that
originated when Roski failed to close on the sale of the Las Vegas Hilton by a January 2001 deadline.

Terms of the agreement were confidential, but Park Place said it would take a one-time charge of $3.8
million for the fourth quarter as a result of the settlement.
"Clearly there are some high-end players ... but our principal focus is on a convention and business hotel,
given its prime location next to the Las Vegas Convention Center," Park Place spokesman Robert Stewart

Stewart declined to say whether the company would consider selling the property at some point in the

"We're delighted that this thing is settled and can move forward with assessing plans for the property," he

Park Place is expected to continue its convention strategy -- a position it established when it initiated the
lawsuit against Roski, Deutche Bank Securities casino analyst Marc Falcone said.

"I think that's the course they will still take, to try and maximize the operations of the property through the
benefits of the expanded convention center," Falcone said. The expanded Las Vegas Convention Center is
adjacent to the Hilton.

The company may still try to unload the property, he said.

"I think if the company was approached with the right offer I think they would consider it. But only at the
right price."

"I don't think this changes anything," McDonald Investments analyst Dennis Forst said of the settlement.

"All things being equal I think they would probably try to sell -- but that hasn't worked in the past," he said.

The Las Vegas Hilton was the world's biggest hotel when it opened in 1969 as the International Hotel but
it's off-Strip location was also called a major gamble. Billionaire Kirk Kerkorian's property was sold to
Hilton in 1973, which then spun off the property and other gaming holdings to Park Place in 1998. The
hotel has since been challenged by newer and more lavish resorts on the Strip that are also hosting

It generates a fraction of Park Place's overall cash flow in the region.

The property, along with the Reno Hilton, Caesars Tahoe and the Flamingo Laughlin, recorded a combined
$62 million in cash flow last year. Including the Flamingo Reno, which was sold in late 2001, the
properties reported $60 million in cash flow a year earlier.

Cash flow, typically defined as earnings before interest, taxes, depreciation and amortization, is a key
indicator of casino performance.

By comparison, the company's Flamingo Las Vegas yielded $91 million in cash flow, Caesars Palace
reported $81 million and the combined Paris-Bally's properties reported $189 million.

Cash flow margins improved at the Hilton in the fourth quarter, the company said in an earnings statement
last month.

The failed sale hasn't tainted the property's future prospects, said Carlton Geer, director of commercial
broker CB Richard Ellis' Global Gaming Group in Las Vegas.

"I see some good things happening for them in the future with the monorail, the business that's driven by
Paradise (Road) and the development at (nearby luxury condo tower) Turnberry Place," Geer said.
Park Place's new chief executive, Wallace Barr, appears to be focusing on improving property performance
and cross-marketing strategies, he said.

Barr replaced Thomas Gallagher, who resigned under pressure in November and amid concerns about the
company's falling stock price. Gallagher, former general counsel for Hilton Hotels, replaced Arthur
Goldberg after Goldberg's death in 2000.

Casino transactions have long escrow periods, which can complicate financing deals if the value of the
asset changes during that time, Geer said.

"Transactions not closing isn't unique. The significance is that (the Las Vegas Hilton) was such a large
transaction and a historical asset in Las Vegas."

Both parties expressed satisfaction with the settlement.

"We are pleased to announce that the parties have reached an amicable settlement of the litigation related to
the Las Vegas Hilton," Park Place Senior Vice President and General Counsel Bernard DeLury said in a
statement Monday.

"We're pleased by the outcome," added Craig Cavileer, general manager of the Silverton casino hotel in
Las Vegas.

Roski owns the Silverton and has a stake in the Staples Center in Los Angeles as well as the Los Angeles
Kings and Los Angeles Lakers professional sports teams. His Majestic Realty Co. develops business parks

Roski is focusing on developing a mixed use casino and retail project on 100 acres he owns next to the
Silverton and will continue remodeling projects begun last year at the property, Cavileer said. They will
include $22 million of room renovations as well as upgraded restaurants and bars, he said.

Park Place agreed to sell the Las Vegas Hilton to Roski for $365 million in 2000, expecting to take a $32
million non-cash loss on the sale.

Goldberg, who was chief executive at the time, said the sale of the Las Vegas Hilton would allow the
company to "consolidate its high-end gaming operations" at Caesars Palace. Park Place acquired Caesars
Palace in 1999 when it bought the Caesars World Inc. chain. The flagship property competed with the Las
Vegas Hilton for high-rollers, analysts had said.

Park Place fired off the first legal shot in January 2001, accusing Roski of breach of contract in federal and
state lawsuits. Park Place asked for a declaratory judgment entitling it to keep Roski's $20 million deposit.
The company also asked for more than $20 million in damages.

Roski immediately filed a countersuit in state court, accusing Park Place of breach of contract over a
"significant and substantial downward trend" in cash flow at the Las Vegas Hilton, thwarting financing for
the deal. Roski also asked for unspecified damages.

Much of the Las Vegas Hilton's high-end business had been moved to other Park Place properties in
anticipation of the deal. The purchase contract called for Park Place to retain all of its high-end customers.

Roski also claims that he was to have received $30 million in financing from Park Place and that Hilton
Hotels and its chairman, Barron Hilton, interfered with Goldberg's agreement to sell the hotel.
Hilton Hotels had been an unsuccessful bidder on the property, Roski said. Hilton and its chairman
attempted to block the sale, finding it offensive that Park Place would sell what had been Hilton's flagship
brand in Las Vegas, he said.

Roski's suit accused Hilton Hotels of exerting influence over Park Place after Goldberg's death by installing
a management group dominated by officers loyal to Hilton. The two companies maintain close ties, with
Hilton Chief Executive Stephen Bollenbach serving as board chairman of Park Place and Hilton board
members Barron Hilton and Steven Crown also serving on Park Place's board.

Sources said that Roski had also held unsuccessful talks with financier Carl Icahn, now the owner of the
Stratosphere, and International Game Technology Chairman Chuck Mathewson about becoming equity
partners in the property.

Roski had aimed to reposition the Las Vegas Hilton from a high-end casino to a mid-level property and
also had plans to boost its casino, food and entertainment offerings to attract more locals and compete with
neighborhood casinos on the Boulder Strip. Roski also wanted to retain convention traffic generated by the
adjacent Las Vegas Convention Center.

Federal securities laws require Park Place to record the one-time charge in the fourth quarter of the
previous year because it has not yet filed its annual report with the Securities and Exchange Commission.

Including the charge, the company reported a net loss of $21 million, or 7 cents per share, in the fourth
quarter. That compares to a loss of $18 million, or 6 cents per share, without the charge as reported
informally last month. Adjusted earnings, which exclude one-time charges, remain the same at $16 million,
or 5 cents per share.

Park Place to sell LV Hilton
By Liz Benston


Wednesday, Dec. 24, 2003

Park Place Entertainment Corp. today agreed to sell its struggling Las Vegas Hilton to an affiliate of
Colony Capital LLC for about $280 million.

The transaction is expected to close by the end of June.

Colony Capital, a Los Angeles-based real estate investment firm, said it expects to enter into an agreement
with Hilton Hotels Corp. -- which owns the rights to the Hilton brand -- to allow the property to continue
using the Hilton name, the companies said.

Colony also said it intends to continue operating the Las Vegas Hilton as a hotel-casino but may build
additional structures on vacant land at the site. The future status of the Hilton's staff was unknown.

It was unclear early today whether Colony would retain the Star Trek Experience attraction at the property.
Park Place said it intends to use the proceeds from the sale -- estimated at $256 million after taxes -- to
reduce debt. The company expects to report a gain on the sale of about $85 million after taxes, or 28 cents
per share, in the quarter in which the transaction closes.

Expenses have exceeded cash flow at the Las Vegas Hilton for at least the past two years, dragging down
earnings at Park Place. The company's Chief Executive Wally Barr has expressed interest in selling off
non-core assets nationwide.

Colony Capital was attracted to the real estate potential of the Las Vegas Hilton site, according to a source
who worked on the transaction and declined to be identified.

The off-Strip resort sits on 56 acres, including undeveloped land that could be used to realign traffic flow
and build hotel towers, timeshares, condominiums and even retail, industry insiders said.

"Many of the investors consider this to be a combination of a casino and real estate play," the unnamed
source said. "They were looking at ways to use the assets to maximize returns by using the land around the
Las Vegas Hilton as the land becomes more valuable. Colony Capital likes to invest in this kind of asset."

"The hotel-casino and the prime real estate on which it sits are truly irreplaceable assets," Colony Capital
Chairman and Chief Executive Thomas J. Barrack Jr. said in a statement. "We look forward to this
opportunity to further enhance and reposition the property."

Colony Capital representatives could not be reached for further comment.

Colony is one of the world's largest REITs and is known for buying distressed assets. The company bought
Resorts International in Atlantic City and sold the Harvey’s Casino Resorts chain to Harrah's Entertainment
Inc. in deals announced in 2001. It was also a suitor of the bankrupt Aladdin resort, which was eventually
sold to another party.

Casino entrepreneur Nicholas Ribis, vice chairman of Resorts International, will be a partner in the Las
Vegas Hilton acquisition, Park Place said.

Other bidders on the Las Vegas Hilton included Richard Alter, managing director of Financial Capital
Investment Co. and another Aladdin suitor; timeshare developer Crescent Heights; and Marriott
International, another interested bidder of the Aladdin.

Real estate investor Carl Icahn also was interested in buying the Las Vegas Hilton but forwarded an offer
that was too low to make the next round in the bidding process, sources said.

Extreme makeover
By Liz Benston


Monday, Nov. 7, 2005

Customers arriving at the Las Vegas Hilton are now met with scaffolding, drywall and a
construction crew in the lobby as the 36-year-old property undergoes a makeover designed to
make it look decades younger.
Construction walls at the rear of the casino feature photos of leggy models assuring visitors that
the work going on behind the scenes "won't detour your fun." Another sign says, "Caution: Bright
future ahead."

The Las Vegas Hilton, still months away from revealing its new self, has a lot to gain from the
millions of dollars its new owners are plowing into the off-Strip hotel.

Colony Capital paid $280 million last year to buy the 59-acre Hilton site from Caesars

In a recent interview with In Business Las Vegas, a sister publication of the Las Vegas Sun,
Resorts International Chief Operating Officer Roger Wagner called the Las Vegas Hilton "the
buy of the century."

"You couldn't replace this building for a billion dollars," Wagner said.

Built by MGM Grand founder and MGM Mirage shareholder Kirk Kerkorian, the Las Vegas
Hilton, then called the International, was then the world's largest hotel and home to resident
entertainer Elvis Presley. It fell out of the limelight as newer resorts sprouted on the Strip and
stagnated in recent years under Caesars Entertainment, which had attempted to sell the property
to focus on its better-performing Strip casinos.

Colony snapped up the Hilton at a deflated price and has begun work on a five-year master plan
to spiff up the property and use its land more effectively.

Colony in July created a new holding company to operate its six casinos, including the Hilton.
Resorts International Holdings also owns Resorts Atlantic City as well as four properties
purchased from Caesars Entertainment and Harrah's Entertainment prior to Harrah's buyout of
Caesars. Those include the Atlantic City Hilton, Resorts East Chicago, Resorts Tunica and Bally's

The casino holding company's headquarters is the Las Vegas Hilton.

The company has already tripled annual cash flow at the property since Caesars owned it and has
revived the casino's high roller business, Wagner said. The company is pushing to attract
international players, particularly high rollers from Latin America. And it expects to create a
frequent gambler program next year that would allow players to rack up points across Resorts' six

The remodeling effort, expected to cost more than $20 million, will include a new porte-cochere,
outdoor landscaping, a remodeled lobby and front desk, a lounge, coffee bar and upgraded casino
floor. All of the work is expected to be complete by the end of December.

The finished lobby will feature sparkled marble imported from Italy and Spain, incandescent
lighting instead of fluorescent lights and a more upscale front desk with flat-screen TVs.

While the casino will retain its signature crystal chandeliers, new carpeting will be put in along
with new wall coverings and column finishings.
Some slot machines also will be moved around to make it easier to walk through the casino and
create a more inviting atmosphere for customers entering from the lobby. Employees also will
wear new uniforms.

The Hilton's main casino bar will be replaced by Tempo, an ultramodern bar and lounge with 100
seats and a private area for high rollers in the style of a Strip ultralounge.

The property's Perk Place coffee bar and deli will be replaced by Fortuna, a coffee, wine and
pastry bar resembling a luxurious Starbucks. The coffee bar will also offer Internet access.

Upstairs, workers have finished upgrading many of the Hilton's more luxurious suites. The
property's Lanai and Director suites feature plasma TVs, new marble floors and showers, granite
vanity tops and rain shower heads as well as a private terrace.

Of the Hilton's 3,000 or so total rooms, about 300 are suites. Sometime next year, the first series
of regular rooms will be remodeled.

Being a private company has its advantages, Wagner said.

"If we want to do something that's disruptive that we think will help us in the long term, we can
do that without retribution" from shareholders, he said.

When the company bought the Hilton in June 2004, Colony officials said at the time they
expected to spend about $70 million on improvements.

In September the property opened a new poker room, replacing several banks of slot machines in
what had once been the site of a shuttered poker room years ago.

Shortly after Colony bought the hotel, the owners upgraded the Superbook, the country's largest
sports book, including the installation of small LCD screens for players and more comfortable

Still to be done is more remodeling near the convention center. The Hilton's steakhouse will be
remodeled, as will the Plaza Bar and the Shimmer entertainment cabaret. Shimmer, formerly a
nightclub, is now home to comedian David Brenner as well as other entertainment acts.

Last year the Hilton announced a deal with singer Barry Manilow to become a resident headliner
at the Hilton Theater into 2006.

"Barry is a huge marquee value for us around the country right now," Wagner said. "This
property, being off the Strip, needed something to use as a destination marketing device ... The
community is talking about Barry Manilow in the same vein as Celine Dion."

The Hilton is also hoping to better capitalize on its "Star Trek" attraction, which includes a tour
and ride operated in partnership with Paramount Pictures.

There are a few years left in the contract with Paramount. The property hasn't decided whether to
keep the attraction longer term, Wagner said. The attraction is located near the Space Quest
casino, a themed casino floor primarily fed by traffic from the Las Vegas Monorail stop.
Most people coming into the property from the monorail tend to be occasional visitors to Las
Vegas rather than regulars, Wagner said. That may change once more people begin to use the
service and it extends to the airport.

The company is still working on a master plan for the Hilton's 59-acre site.

About 50 of those acres are vacant or underdeveloped, Wagner said.

"We are looking at all kinds of ways to stick our front door closer to where people are wandering
around," he said. "Whether that means we'll build a boutique hotel right next to the convention
center by the end of the property and knock something down, I don't know. We haven't made any
decisions there. We've got all kinds of opportunities."

The Hilton owners are shying away from condominiums, even though plans for about 100 high-
rise condos are sprouting across the Las Vegas Valley.

"There's only so many high-end people," Wagner said. "Some of the ones coming out of the
ground are selling to investors who think they can spin these things off. The cost of labor and
construction and the cost of goods, especially with the Katrina problem now, is going to put these
developers in a position where what they sold them for today will not cover what it will cost to
build them three years from now when they have to deliver the product."

From (2008 postings):
It looks like Star Trek: The Experience might be leaving the Las Vegas Hilton. From the LVRJ:

The lease on the biggest nerd magnet since the International Consumer Electronics Show expires at the end
of the year, and a spokesperson for owners Cedar Fair Entertainment Co. told the Web site
“there are currently no plans to renew” it.

If Cedar Fair were to beam Experience out of the Hilton, it could mark the demise of a 10-year run that has
made Las Vegas the center of the universe for fans of the seminal science fiction franchise.
The lease on the biggest nerd magnet since the International Consumer Electronics Show expires at the end
of the year, and a spokesperson for owners Cedar Fair Entertainment Co. told the Web site
“there are currently no plans to renew” it.

If Cedar Fair were to beam Experience out of the Hilton, it could mark the demise of a 10-year run that has
made Las Vegas the center of the universe for fans of the seminal science fiction franchise.

Experience Ending: Hilton Star Trek attraction may seek out new life elsewhere

The Experience isn’t cheap: it costs $37.99 for two rides and access to the museum, which I think is the
most interesting part of the whole place.

It would be a shame to see the Experience close, since it obviously caters to a demographic that many other
Vegas outlets don’t: editor-in-chief Anthony Pascale stopped short of saying Experience would bolt, but he said
it didn’t look good for Trekkies who make a pilgrimage to the Hilton as part of their Las Vegas vacations.

“It is the premiere, and right now only, live Star Trek attraction in the world,” Pascale said. “A lot of nerd
weddings go on at that place.”

My biggest problem with ST:TE is not with the attraction itself, but with the Hilton’s SpaceQuest casino.
That’s the section of the casino that surrounds ST:TE. I don’t think they did a very good job of giving the
SpaceQuest casino a Star Trek look. It’s just generic space-looking, with no design elements from any of
the Star Trek shows or movies at all. And out of all of the artifacts from the show they could have used in
the display cases, the most prominent one they used was the salt monster from an early episode of the
original series–not exactly a recognizable icon. When you imagine the potential, it’s a real let-down.

That being said, I’d like to see the Hilton and Cedar Fair not only keep ST:TE, but upgrade it. I think it’s
just good business. You’d have to work pretty hard to find an attraction that would have the same
immediate draw as a Star Trek one–you figure each Trekkie who comes to Vegas has to visit it at least
once. In an industry that is warming up to the value of branding, an association with one of the
entertainment world’s most recognizable brands seems to be a slam dunk.

I don’t think so, you might say. The Trek franchise is moribund–the last show went off the air three years
ago. Yes, but I think that it’s due for a revival. There’s a new movie in production, due to open next May.
And it’s a complete re-start of the franchise: J. J. Abrams, the creative force behind Lost, is directing it, so
I’d expect something really, really good. Closing the attraction a few months before a major movie’s
released just seems so obviously short-sighted to me. Why not just extend the agreement for another year,
at the very least, or commit some money to tweak the museum and, just maybe, develop a new ride that ties
in with the movie?

Jul. 21, 2009

Lienholder: Live long and pay up

If only "Star Trek: The Experience" had been created in a holodeck, the Las Vegas Hilton might have
avoided a construction lien.

Unfortunately the attraction was made from wood, plastic and other materials that cost money to remove,
unlike the lifelike scenes generated by computer in the holodeck on the Enterprise, the spaceship in the
science fiction television series, that appeared and disappeared instantly and on command.

The Las Vegas construction company that removed hardware from "Star Trek: The Experience" and
restored the space has placed a lien against the Hilton over claims it wasn't paid for the work.

According to documents in district court in Clark County, Quality Choice Construction says it is owed
nearly $523,000.

In two separate filings the company says Cedar Fair Entertainment Co., former operators of the attraction,
and Rohit Joshi, the Neonopolis developer who intends to install the exhibit downtown, were supposed to
pay for the project.
A lawyer for Quality Choice says the liens were placed against the Hilton because the property benefited
from the work.

"We did the work, we didn't get paid, we have a lien against the property until we get paid," attorney Bruce
Willoughby said.

A representative for Cedar Fair wasn't available for comment late Monday.

Joshi says the lawsuit is a billing dispute that will be resolved and won't stop or slow his plans to install
"Star Trek: The Experience" at Neonopolis.

The Experience had an 11-year run at the Hilton that ended Sept. 1. Later that year, Joshi revealed an
agreement to revive the attraction at Neonopolis. Joshi says a new version of the attraction could open in

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